Minggu, 01 September 2013

Life Insurance

Life Insurance

Life insurance is a contract between a (holder of the insurance policy) insured and the insurer, where the insurer agrees to pay a designated beneficiary a sum of money (the "benefits") upon the death of the insured. Depending on the contract, other events such as terminal illness or critical illness may also trigger payment. The policyholder typically pays a premium, either regularly or as capital. Other expenses (such as funeral expenses) are also sometimes included in the benefits.

 The advantage for the policy owner is "peace of mind", knowing that the death of the insured person will not result in financial hardship for loved ones and lenders.

 It is possible that life insurance payments to be made in order to help supplement retirement benefits, however, should be carefully considered throughout the design and financing of the policy itself.

 Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot and civil commotion.

 Life-based contracts tend to fall into two main categories:

  Protection policies - designed to provide a benefit in the event of specified event, typically a lump sum payment. A common form of this design is term insurance.

 Investment policies - where the main objective is to facilitate the growth of capital by regular or single premiums. Common forms (in the U.S.) are whole life, universal life and variable life policies.

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